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Overview on Forex Introducing Brokers
With the passage of the Farm Bill in the early part of 2008 Congress required the future
registration of many of firms in the off-exchange foreign currency (spot forex) markets. Included in
the group of firms and managers who will be required to be registered under the new forex
regulatory regime are those firms which act as Forex Introducing Brokers.
Background on Registration
As mentioned above forex firms will need to register soon. The Commodities Futures Trading
Commission (CFTC) is charged with creating the forex registration rules and the National Futures
Association (NFA) is charged with overseeing compliance and implementing the new rules. While
the CFTC has not yet released proposed rules (there will be a comment period before any rules
are actually implemented), the NFA has already begun the process of updating its systems and
training staff to handle the new regulatory regime. In fact, the NFA has provided much of the public
information on the what the rules may look like when passed.
Definition of a Forex Introducing Broker
The definition of a forex introducing broker (also known as a forex IB) is similar to a regular
introducing broker, except that the forex introducing broker will introduce clients (generally
managers and other introducing brokers) to forex dealer members (also known as FDMs) which
are the firms which actually execute the off-exchange forex trading. [Note: the term forex dealer
member is given to those firms which are registered with the CFTC as futures commission
merchants and who only engage in off-exchange foreign currency transactions.] The Forex IB can
be either an individual or a firm; each individual person of a firm will also deemed to be a Forex
Associated Person (also known as a Forex AP). Both firms and individuals will need to through the
registration process with the CFTC through the NFA.
How to Register as a Forex IB
As we noted above the registration rules have not yet been finalized so we do currently know the
exact method of registration. However, the NFA has indicated that the registration process for
Forex IBs will be substantially similar to a regular introducing broker. In most instances the firm will

need to file a Form 7-R (for the firm) and a Form 8-R (for each owner and associate at the firm ministerial type individuals will not need to register). Each person will also need to have passed
various regulatory proficiency exams. The NFA has indicated that Forex APs will need to have
passed both the Series 3 exam as well as a new exam called the Series 34 exam which will focus
solely on the off-exchange foreign currency markets. Assuming that all of the above is in order,
and all fees have been paid, the forex registration process is likely to take anywhere from 3 to 6
weeks.
Conclusion
Introducing Brokers to FDMs will generally need to be registered as Forex Introducing Brokers
after the new forex registration rules go into effect. Firms and individuals who solicit clients on
behalf of FDMs should begin thinking about registration and should also start talking to a forex
attorney to discuss the best method of proceeding. It is recommend that Forex IBs begin this
process early as there will be a rush toward regulation once the rules go into effect.

Bart Mallon is a hedge fund attorney specializing in forex registration and hedge fund formation.
He also writes extensively on issues related to forex introducing brokers and forex hedge funds.
For more information on forex registration please see forexregistration.com. For more information
on how to start a hedge fund, please see hedgefundlawblog.com.

Article Source:
http://EzineArticles.com/?expert=Bart_Mallon

==== ====
Earn up to thousands of dollars per month. At prelaunchX, we help companies launch new
products and services. Our current launch partner is code-named Forex Firm X. Before the official
launch of Forex Firm X, you can begin growing your potential earnings in three ways... 1. A free,
managed forex account. 2. Sign-up bonuses (up to $100 per person). 3. Monthly commissions
($10/month per person) Sign up today and invite a few friends to watch your launch group and
potential earnings start growing. To learn more about launch groups, see how it works.
http://tinyurl.com/75va9ox
==== ====